Spring 2011 targeted for convention center vote

A financial and management plan on how to fix the convention center funding shortfall is likely to go before Fort Smith voters in spring 2011, with the early consensus of the Fort Smith board of directors to push for a 1% prepared foods tax.

The city of Fort Smith faces a shortfall of between $750,000 and $1 million to operate the Fort Smith Convention Center. The board spent more than 18 months trying to come up with a solution to plug the annual deficit. A state turnback program ends in June 2010 from which the city has received about $1.8 million a year. In 2010 the city will receive only $888,723 in 2010.

An ad hoc convention center committee formed by the board of directors first met April 22 and reviewed several options, including a 1% hospitality tax, finding cuts in the city’s roughly $40 million operating budget, reallocating a portion of the city’s 1% street tax, re-instituting a business license fee and finding a 3rd party operator.

That group eventually endorsed a 1% prepared food tax that would also support the U.S. Marshals Museum and other city art and entertainment facilities and event.

City Directors Bill Maddox and Kevin Settle opposed the 1% prepared food tax, saying instead that the city should ask voters to redirect a portion of the 1% street tax — which generates between $17 million and $20 million a year — to support the convention center and other quality of life projects. Settle said the reallocation of the street tax would be an easier pitch to voters because it would not require raising taxes.

Settle’s plan would set aside no more than $750,000 a year for the convention center and include funds for capital projects for the city parks department, bike trails, sidewalks and other projects. Settle was unsure as to how much of the street tax would be reallocated, saying that number should be based on quality-of-place projects the board decides to fund with the reallocation.

City Directors Gary Campbell, Andre Good, Cole Goodman and Don Hutchings opposed the idea of a street tax reallocation. They said the street tax has been a success and they hear from constituents that it should not be diluted.

“I haven’t heard one person say that is a good idea,” Hutchings said to Settle about the street tax reallocation plan.

Mayor Ray Baker also opposed the street tax reallocation, saying “we don’t need to siphon it off” for other projects when it all is needed to stay on top of street work and provide infrastructure support for the new businesses at Chaffee Crossing.

George Moschner, chairman of the ad hoc committee and chief financial officer for Fort Smith-based Baldor Electric Co., told the board he initially supported reallocating the street tax. But after reviewing the financial and political options he said the prepared food tax became the only reasonable option. He also cautioned the board against altering the street tax program.

“The street tax has been a godsend for us,” Moschner said.

City Director Steve Tyler said after the meeting he is unsure which tax is best, but believes either plan must include funding for the U.S. Marshals Museum. In January 2007, the U.S. Marshals Service selected Fort Smith as the site for the national museum. The museum is to be built on the banks of the Arkansas River in downtown Fort Smith. The cost to build the 50,000-square-foot museum — including exhibit work — is estimated at around $50 million.

“I think it’s essential that the Marshals Museum get a piece of that,” Tyler said.

Opposition to the prepared food tax is gearing up. Eddie York, owner of Art’s BBQ in Fort Smith, has set a July 19 meeting at his restaurant with at least 15 other restaurant owners and managers who oppose the tax.

“I talked to 15 or 16 (restaurant owners) this morning. They are all opposed to it. And they are angry about it,” York said.

Not all area restaurant owners oppose a prepared food tax. Tom Caldarera and Kevin Dorey support it. Caldarera and his family own and operate two restaurants — Taliano’s and Emmy’s — and a catering operation. He was a member of the ad hoc committee and is a member of the Fort Smith Advertising and Promotion Commission. Dorey is the operating partner of 21 West End in downtown Fort Smith. An investor in the restaurant is City Director Cole Goodman. (Link here for a recent report on local and statewide opinions of the prepared food tax.)